Rx drug costs on exchange plans higher than employer-sponsored coverage

Silver plans offered through the exchanges may require patients to pay more than twice as much out of pocket for prescription medicines as they would under a typical employer plan, offering employers a prime opportunity to use health care benefits as retention and recruitment tools for their employees.

Silver plans — the second lowest coverage tier on the Affordable Care Act’s public health insurance exchanges — impose 130% higher cost sharing for prescription medicine, along with a combined deductible, than typical employer-sponsored plans, according to a new report by the Seattle, Wash.-based Milliman Inc., a consulting company. The Milliman report also notes that silver plans are nearly four times more likely to have a single combined deductible for medical and pharmacy benefits (46% of the time) compared to typical employer-sponsored plans (12%).

See related story: Access to Rx drugs challenged by the exchanges

Employees with chronic conditions requiring the use of medications could be motivated to seek out employers offering high quality health care coverage rather than those that have opted to send their employees to the exchanges, says Brenda Gagnon, a pharmacy-focused benefit adviser and president and CEO of the health care consulting firm B.M Gagnon Associates.

“Employers have started recognizing that offering great health care coverage has become an attraction tool for high quality talent and retention for current employees,” she says. “This movement started in mid-year 2013 and will pick up speed faster this year.”

She adds: “Advisers that don’t take this knowledge and bring it into their business practice will be left behind.” 

Also see: Helping employers halt the Rx drug cost hemorrhage

“Americans participating in the exchanges were promised coverage comparable to employer plans and yet the reality is that many new plans are failing to provide an appropriate level of access to quality, affordable health care,” says John Castellani, president and CEO of Pharmaceutical Research and Manufacturers of America (PhRMA), the Washington, D.C.-based trade association that commissioned the report.

“Patients face hurdles in accessing the medicines they need to manage their conditions, which is particularly problematic for Americans trying to control their chronic diseases,” he adds.

According to Milliman’s analysis, the typical deductible for silver plans is $2,000.

Previous studies have found that higher out of pocket costs reduce patients’ likelihood of taking prescription medicines to manage chronic conditions. The result is an increase in hospitalizations and higher health care costs overall, a common reason employers often exclude pharmacy benefits from deductible requirements — in the long-term it saves the employer money on increased medical costs.

Programs that encourage better adherence to medication management for chronic conditions have also been found to reduce emergency department visits, hospitalizations and other preventable, costly care, the Milliman report adds.

According to a 2012 Health Affairs study, improved medication adherence for patients with diabetes has the potential to save $8.3 billion each year.

The Milliman report analyzed the differences between common health care benefit designs offered to individuals through the exchanges and typical employer-sponsored plans. The report looked at silver plans because they were the most popular in the enrollment period that ended March 31 of this year.